Tax overhaul risks leaving pension recipients underwithheld when it comes time to file for 2018

Millions of Americans receiving pensions could be in for a bad tax surprise next year.

A little-noticed effect of last year’s tax overhaul is that many pension payments are now larger, reflecting the new lower tax rates in effect for 2018. But this bump-up increases the risk that recipients will be underwithheld at tax time next year—and therefore owe a penalty. To avoid this, retirees should immediately check their withholding and adjust it if necessary.